State Medicaid policy spells new opportunities for Milwaukee-area HMOs     

By ALISON GRILLO

Contributing Writer

     Managed-care providers are gearing up for new business as the state requires more Medicaid recipients to join health maintenance organizations (HMOs).

     Under the state’s plan, to be implemented between July 1996 and March 1997, membership in an HMO will be mandatory for Medicaid recipients in all but 15 counties, most of these in rural areas in northeast and northwest Wisconsin.

     Currently HMO membership is mandatory for Medicaid recipients in four Wisconsin counties -- Milwaukee, Waukesha, Kenosha, and Eau Claire.

     But officials for some HMOs are wary that as the state giveth, the state also may taketh away.

     The are concerned that Gov. Tommy Thompson’s much-touted W-2 welfare reform program, aimed at getting people off welfare, eventually will make scores of low-income persons suddenly ineligible for government-financed health care and “cast out without a safety net,” said Richard Nemitz, president and chief executive officer of Managed Health Services Insurance Corp., Milwaukee.

     Added PrimeCare Health Plan president Larry Rambo, “The gains that we get from expansion (of the Medicaid-HMO program) will probably be offset by the effect of the losses we experience in the W-2 program.”

     Karl Rajani, chief executive officer of Genesis HEalth Plan, Greenfield, whose company does approximately 98 percent of its business with Medicaid recipients, said some estimates have W-2 reducing the state’s Medicaid population by between 20 and 30 percent.  

     Despite concerns, however, HMO officials said W-2 is still something less than a pressing issue.  

     “We’re not focusing on the W-2 issue because there is so much undecided information at this point,” said Julie Faulhaber, Genesis vice president for government programs.

Doubling of enrollment

     And while the impact of the W-2 program is not known, the state’s expansion of the Medicaid-HMO program will bring approximately 130,000 additional recipients into HMO membership, “nearly doubling enrollment,” said Angie Dombrowicki, acting chief of the management care division for the Bureau of Health Care Financing in the state Department of Health and Social Services.

     More Medicaid recipients in HMOs will mean “better continuity of care for recipients, and better savings for the state, said Dombrowicki. Since managed care costs the state less than fee-for-service health plans, the state will save approximately $7.4 million annually through expansion of the Medicaid-HMO program, she said. Department of Health and Social Services.

     A recent Bureau of Health Care Financing study found HMOs provide a level of care more consistent with “currently accepted medical practice” especially in the areas of periodic child health assessment and care provided to women.

     Dombrowicki said recipients will have a choice of two or more competing HMOs and to make choices available, the state is bringing into the program 11 additional MOs for a total of 19.

     For example, Milwaukee and Waukesha counties will be service by eight HMOs -- PrimeCare; Genesis; Compcare Health Services Insurance Corp., Milwaukee; Humana-Wisconsin Health Organization, Milwaukee; Managed Health Services; Maxicare Health Insurance Co., Milwaukee; Family Health Plan Cooperative, West Allis; and Network HEalth Plan, Green Bay.

     The state projects 9,347 additional new Medicaid-HMO members in Milwaukee County, and 612 in Waukesha County, according to figures released by the state.

     The biggest boost to HMO enrollment is expected to come in Racine County, where 10,424 new recipients are projected.

Seven HMOs -- the same eight as in Milwaukee and Waukesha -- will compete for the new business.

     Under the state’s plan, HMO membership will be voluntary for Medicaid recipients in three counties -- Forest, Langdale, and Oconto. HMO membership will be mandatory only in selected ZIP codes in eight counties -- Buffalo, Pepin, Pierce, St. Croix, Polk, Taylor, Oneida and Vilas.

Assessing new business

     For some HMOs participating in the program, the state’s expansion means going into new counties, assessing the profitability of the Medicaid population, and eventually establishing networks of providers.

     “It’s very time consuming,” said Faulhaber, noting that Genesis has had to contract extra personnel for the undertaking.

     Expansion into new counties is complicated because different counties have different levels and types of existing health care, Faulhaber said.

     In some counties, for instance, Medicaid residents rely on their county health department, a resource that Genesis has tried to use in creating provider networks.

     “We want to see that these people get medical treatment wherever they are most comfortable,” said Faulhaber.

     Managed Health Services, in anticipation of between 6,000 and 8,000 new recipients, has opened a new office in Fond du Lac.

     After much groundwork -- and much waiting for for the state to finalize its expansion plans -- Managed Health Services is eager for the new business, said Nemitz.

     “We have invested a great deal of time and effort, and essentially are ready to go whether our competitors are, or not,” he said.

     Nemitz said Managed Health Services will see competition for new recipients.

     “In virtually every county we’re moving into, there is a minimum of one other HMO participating, and in most cases two or three,” said Nemitz.

     Dr. Edward Hutt, Managed Health Services’ medical director, said the new counties will pose profitability challenges to HMOs

     “You’re not going into area with a heavy concentration of recipients,” said Hutt. “The market is going to be split up quite a bit.”

The Business Journal, Milwaukee, 06/15/96